Weighing Jobs and Deficit

White House Is Unenthusiastic on Legislation That Would Raise Government Debt

By

Elizabeth Williamson

Updated Nov. 24, 2009 12:01 a.m. ET

WASHINGTON -- The White House is lukewarm about proposals by congressional Democrats to introduce broad legislation to create jobs, instead favoring targeted measures that would be less likely to inflate the deficit, administration officials said.

There is as yet no agreement within the White House or in Congress on how to try to curb the U.S. jobless rate. But the differences in opinion suggest that rifts could emerge among Democrats as they wrestle with how to beat back the highest unemployment rate in a generation.

ENLARGE

Job seekers attend a career fair Friday in Long Beach, Calif. The White House and Congress differ on how to try to curb the U.S. jobless rate.
Getty Images

The jobless rate, which hit 10.2% in October, has continued to climb despite the implementation of a $787 billion stimulus package in February.

Democrats' fates in 2010 midterm elections could hinge in part on the success of their efforts to curb unemployment. Recessions historically have cost incumbents in an election year. Heavy losses could threaten Democratic majorities in the House and Senate, and affect the party's chances of passing legislation addressing President Barack Obama's priorities.

A survey of economists to be released Monday by the National Association for Business Economists suggested that a solid recovery in the U.S. economy should ensure that jobs would be created beginning in the second quarter of 2010.

The News Hub panel discusses whether the Obama Administration is up to the task of creating the jobs it promised, a big payday for Bear and Lehman executives and more in the Monday AM Report.

"While the recovery has been jobless so far, that should soon change. Within the next few months, companies should be adding instead of cutting jobs," said NABE President Lynn Reaser. According to the survey conducted Oct. 24-Nov. 5, the recovery, fueled by rising business investments and a continued increase in stock prices, should be strong enough to bring employment gains from around April 2010.

Still, with more than 7.3 million jobs lost since December 2007, 61% of the panelists don't expect a complete recovery of the previously lost jobs until 2012.

Hamstrung by the nation's $1.4 trillion deficit and his pledge not to raise taxes on middle-class Americans, Mr. Obama is keen to avoid any measures suggestive of a second, big-ticket stimulus. With about half of the February stimulus spending spoken for, the measure has created about 640,000 jobs, fewer than the number of jobs lost in January alone.

"There is no discussion of a package like a second stimulus, but we are working closely with Congress and consulting with outside experts to determine the right policies and the right steps," said White House deputy press secretary Jennifer Psaki.

House Democrats have said they plan to introduce a jobs bill next month. Senate Majority Whip Richard Durbin (D., Ill.) on Sunday told NBC's "Meet the Press" that Senate Democrats were keen to pass the health-overhaul bill as quickly as possible, so they could turn to jobs legislation.

Republicans say they would likely reject any sweeping jobs bill. Senate Minority Leader Mitch McConnell (R., Ky.), speaking on CNN's "State of the Union" Sunday, urged Congress to "repeal the balance of the stimulus package" and plow it into deficit reduction, saying it hasn't put enough Americans back to work.

Congress has voted to extend unemployment insurance and other aid to the jobless. But in the Senate, even that took weeks to accomplish, and new ideas for adding jobs are likely to provoke an intense debate over effectiveness and cost.

White House Chief of Staff Rahm Emanuel said in an interview that "there are two engines to our economic message, two ways to generate jobs. One is small business, the second is energy." The government could promote hiring in those sectors through expanded tax credits or lending. "It's not about legislation -- it's about the economy," he said.

House Speaker Nancy Pelosi last week said ideas under discussion in the House included a tax on a variety of financial transactions. Democrats estimate such a tax could raise as much as $150 billion a year, a pool of money that could help offset the cost of a job-growth package.

The White House isn't keen on that proposal: Treasury Secretary Tim Geithner has said he hasn't seen a version of that tax that would be appropriate for the U.S.

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